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Higher CIR adversely impacts profitability

* Angle One reported a PAT of INR2.6b, a 17% miss on our estimates and saw a growth of 14% YoY. Net Revenue grew 49% YoY to INR6.9b (broadly in line with our estimate).

* CI ratio increased significantly to 56% (vs. our estimate of 48.8%), an increase of 730bp sequentially. Expenses came in 13% higher than our estimates. This is because admin & other expenses came in 17% higher than expectations.

* The Board has declared a third Interim Dividend for FY24 at the rate of Rs. 12.7/- per share.

* The Board has approved the raising of funds through the issuance of NonConvertible Debentures, amounting to up to INR5b, in one or more tranches on a private placement basis.

* For 9MFY24, revenue/PAT grew 41%/26% YoY to INR18.8b/INR7.8b.

* We have cut our FY24/FY25/FY26 earnings estimates by 6.8%/5.2%/3% to factor in higher operating cost (employee & admin cost) on account of continued momentum in client acquisition and investments into new businesses. We reiterate our BUY rating on the stock with a revised TP of INR 4,000 (premised on 20x Mar’26E EPS).

Revenues in line; overall market share improves

* The gross broking business witnessed a 39% YoY growth, primarily driven by the F&O segment (up 42% YoY but 6% below our estimates) at INR 5.9b and the cash broking segment (up 27% YoY but 10% below our estimates) at INR 0.8b.

* Gross client acquisition run rate stood at 2.5m, up 17% QoQ. The total number of orders increased to 350m in 3QFY24 from 338m in 2QFY24. This was broadly in line with estimates.

* Interest income came in at INR 2.1b, a growth of 55% YoY and 17% QoQ. MTF book stood at INR18.6b vs. INR14b in 2QFY24.

* Other income increased 44% YoY to INR 1.4b.

Higher Opex led to rise in C/I ratio

* Total Opex increased 75% YoY to INR4.6b (13% higher than our estimates). This is because admin & other expenses came in 17% higher than expectations, which led to an increase in CIR to 56%.

* The surge was owing to increase in gross client additions as well as tech investments into the new tools on the Super App

* Employee costs increased 27% YoY to INR1.4b (broadly in line with our estimate) on the back of hiring for new businesses

Highlights from the management commentary

* Change in tariff structure for the cash intraday segment led to a marginal decline in net broking income. The main purpose here is to gain market share in newer geographies.

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